6G won't wait. Will traditional MNOs still be the main customers when it arrives?

This post originally appeared in September 2023 on my LinkedIn feed, which is now my main platform for both short posts and longer-form articles. It can be found here, along with the comment stream. Please follow / connect to me on LinkedIn, to receive regular updates (about 1-3 / week)

 One line I heard yesterday at #ConnectedBritain that really struck me came from BT Group Network/Security head Howard Watson during his keynote.

He was hoping #6G arrived later rather than earlier, "For the Brisbane Olympics, not LA", ie 2032.

This is not the first time I've heard an MNO exec expressing a desire to let #5G run longer, before 6G prompts more Capex and infrastructure changes. They want to get payback on existing investments before thinking about the next round.

This is unsurprising. The industry itself now recognises that it overhyped 5G before launch, and completely forgot to mention that it would arrive in phases, with all the "cool stuff" really only arriving in later versions, with the features in 3GPP Releases 16, 17 & 18.

Instead, we started with 4G++ (ie non-standalone 5G, with sometimes higher speeds but not much else) and then the first versions of "proper 5G" with the Release 15 standalone cloud-native core.

5G SA gives somewhat lower latency, and some rudimentary QoS and other features, but it's far from the ubiquitous millisecond / gigabit / slicing nirvana that everyone promised in 2018.

I was skeptical from the beginning - and I'm still a "slice denier". (I think #networkslicing remains a critical strategic error and distraction for the industry). But my view is that the really useful stuff in 5G, such as time-synchronous networking, RedCap and vertical-specific elements such as FRMCS for railways, are still a long way from mainstream.

So I can understand that MNOs look at the proposed 6G timeline of 2030, and think "we're still making heavy work of moving to cloud-native 5G standardalone. How are we going to do successive iterations of R15 SA, R16, R17, R18, R19... and make money, all within 6 years?"

[Note: technically 6G should start with Release 21, but based on past experience we'll see R20, or maybe even R19, marketed as 6G by some MNOs]

There is a possible uncomfortable answer that's starting to get discussed quietly. What if 6G isn't primarily about MNOs, at least at first?

6G will happen in 2030, one way or another. The world's universities and R&D labs aren't going to down tools for two years, while MNOs are still trying to "monetise" 5G. There will be a bunch of technologies and standards that get called IMT2030 / 6G.

There might even be multiple standards, either because of geopolitics leading to regional versions, or because my niggling of IEEE and Wi-Fi Alliance eventually prompts them to submit a candidate 6G technology (#WiFi 9 or 10, I guess).

So the question then becomes - will traditional MNOs be the main buyers of 6G in the 2028-2030 timeframe? Or will it be enterprises, new-entrant and niche MNOs, infracos, neutral-hosts, satcos, governments and others building greenfield wireless networks?

Is the failure of 5G to live up to inflated expectations actually going to be the pivot point for the (slow) demise of the legacy MNO model? Are we watching #pathdependency effects in play?

 

Data traffic growth forecasts - AD Little's new report has a lot better methodology than most

This post originally appeared on June 5 on my LinkedIn feed, which is now my main platform for both short posts and longer-form articles. It can be found here, along with the comment stream. Please follow / connect to me on LinkedIn, to receive regular updates (about 1-3 / week)

When I saw that Arthur D. Little had published a report on “The evolution of data growth in Europe”, on behalf of ETNO Association & GSMA, I rolled my eyes.
 
Both organisations have previously published terrible studies by consultants, riddled with flawed assumptions and dodgy multiplier "fiddle factors". I’ve loudly criticised Axon and Coleago reports related to the (un)#fairshare and #6GHz #spectrum debates respectively.
 
So I started the ADL report with trepidation, not helped by a strange typo / editing error in the first paragraph.
 
But actually, the report is pretty good, and I broadly agree with both methodology and conclusions, albeit with one major caveat.
 
It estimates usage of home and mobile broadband on the basis of hours-per-day of active use of heavy applications such as video streaming, gaming and possible metaverse-type experiences.
 
I’ve used GB-per-hour myself, to model passenger data-traffic demand on trains. It makes more sense than the usual Gbps, as most applications are “bursty”. It also fits the typical heuristics of human behaviour. How many seconds a day do you spend on social media?
 
The central prediction of 20% growth in fixed traffic and 25% for mobile usage seems reasonable. I could argue for 25/20 rather than 20/25, but it's fine as a rough estimate.

Importantly these rates for the next few years are well within the bounds of both fixed broadband (moving to #FTTP) and mobile (on #5G) without incremental investments in extra capacity, beyond the main "generational" shift & CAPEX. And that is driven by government policy and competition, not traffic load and congestion. The report convincingly shows that nobody really needs/values more than 100Mbps for current apps, so #gigabit networks have plenty of headroom.

My main criticism is there is no analysis of mobile device traffic carried over fixed networks and #WiFi. Smartphones used at home for video, gaming or social media will be c80% on Wi-Fi, and indoor usage is c80% of the total.

The report also talks about AI pre-emptively downloading content for “infinite scrolling”, but doesn't suggest it could be smart enough to do so mostly over cheap / low-energy fixed connections. (IMO, by 2030, governments may *mandate* cellular offload via neutral-host or Wi-Fi for indoor use).

I agree with the report's assertions that VR is in an indoor/fixed application, that most #IoT traffic is a rounding-error and that #Web3 is probably irrelevant. The #metaverse scenarios seem mostly plausible.
 
One area I think ADL underestimates is fixed broadband for video streaming. While Netflix and YouTube are “active” viewing, historically, many people just leave broadcast TV switched on, even if nobody is in the room except the cat.

If TV really goes online-only, then that becomes a genuine “waste” of capacity, unless you can advertise to pets.

Overall - really quite good analysis, which (ironically, given the sponsors) fatally undermines the #InternetTrafficTax rhetoric.

 

CAPEX in telecoms - beware of headline numbers

This post originally appeared on June 12 on my LinkedIn feed, which is now my main platform for both short posts and longer-form articles. It can be found here, along with the comment stream. Please follow / connect to me on LinkedIn, to receive regular updates (about 1-3 / week)

CAPEX numbers are important in #telecoms. But they're also often collected and analysed in a haphazard fashion, or sometimes twisted and misinterpreted. There are examples that wrongly imply casual links or are carefully selected to drive specific policy choices.

- Telco execs watch CAPEX stats as they're important elements of cashflow & also signify key strategies and technology transitions
- Vendors watch #CAPEX stats to understand demand for new products
- Investors watch CAPEX as inputs to their valuation models, and as a barometer for company/industry health and prospects
- Policymakers watch CAPEX as it gets captured in "investment" statistics, and as an indicator for potential regulatory changes (or as a metric of success of previous policies)

Various ratios are commonplace, for both companies and the industry:
- CAPEX vs. revenues
- CAPEX vs. EBITDA
- CAPEX of telecoms vs. tech/hyperscalers
- CAPEX vs. R&D spending
- Fixed vs. Mobile CAPEX
... and so on

The problem is that "telco CAPEX" is also a very vague and malleable concept. Digging into it reveals many more questions - and problems with the methodologies and conclusions drawn, especially where headline numbers are concerned.

Some of the questions I'm currently looking at include:

- What counts as a "telco"? Are you including towercos, subsea fibre operators, municipalities building networks, MVNOs and many others?
- Are historic CAPEX numbers restated when telcos sell or acquire other businesses, especially tower spin-outs?
- Is it meaningful to compare CAPEX for 10 / 30 / 50 year assets such as #FTTP, which will generate decades of new revenue, with last year's figures?
- How do you separate CAPEX for basic coverage vs. incremental capacity vs. "generational" upgrades to fibre or #5G? A lot of CAPEX occurs even if usage is low
- How do you deal with leasing or other financing models? If CAPEX shifts to OPEX, how is it captured in the stats?
- What happens with "cloudified" networks? Firstly they rely on shared (often 3rd-party) assets, and secondly they are *supposed* to lower costs / investments. But will the lower CAPEX be viewed as a sign of distress, not modernisation?
- Is non-network CAPEX broken out (eg retail sites, central offices, datacentres etc)?
- Is "adjacent capex" included and if so, how?, eg in-building #wireless, #spectrum licenses, software development

I hear many commentators and lobbyists claim "#NetNeutrality led to lower CAPEX!" or "Streaming traffic leads to higher CAPEX!" or "There's an investment gap!". Without detailed data - and an analysis of causality - you have to question the veracity & meaningfulness of such rhetoric.

In summary - CAPEX is indeed important. But in fact it's so important, that headline numbers are often useless or misleading.

Ask for details on segmentation, methodology and definitions - if they aren't available, treat the numbers with deep skepticism.

#FTTX #telcos #regulations #networks #fairshare